TaxTMI 
TaxTMI 
GST ITC refund (for exempt output)
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....ST ITC refund (for exempt output)<br> Query (Issue) Started By: - Yash Jain Dated:- 8-10-2019 Last Reply Date:- 9-10-2019 Goods and Services Tax - GST<br>Got 7 Replies<br>GST<br>We are manufacturer and trader. For mfg, we buy input goods(5%) and output is taxable (5%) and exempt. Due to rule 42, we do itc reversal also. We are accumulating huge inputs and even after reversal and setoff for sale....
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....s, ITC is left. Can we claim ITC refund .? What will be procedure and under which section we can claim Reply By Himansu Sekhar: The Reply: No refund provision exists for your case. But please check your processes for the huge accumulation of credit when apparent value addition is there. Input and output are having same rate. Salary, electricity consumption, misc charges mist jave been incurred.....
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....please check rule 42 properly. Reply By KASTURI SETHI: The Reply: ITC can be accumulated only if rate of tax on inputs (inward supply) is higher than that of outward supply. In the scenario explained by you, a huge accumulation of ITC is a very serious matter. Such situation indicates that either value addition is incorrect or amount of ITC reversed is incorrect. Instead of thinking about refund....
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.... claim (which is not admissible) in this scenario, examine both aspects as advised by Sh.Himansu Sekhar Ji. For fool-proof exercise, you are advised to consult an C.A. or C.M.A. Reply By Yash Jain: The Reply: Sorry for mis interpretation, the amount is not huge and not recurring all the time.. it's nearly 1lakhs rupees. Reversals are correct as per the sales, but due to other goods tradin....
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....g activity, turnover is being increased, while exempt t/o and common credit remain unchanged. So the reversal ratio is reduced. Reply By KASTURI SETHI: The Reply: O.K. Sir. But refund is not admissible under Section 54 of CGST Act. The basic condition for taking ITC is that it must be used in the course of business or furtherance of business. You are well-conversant with GST Acts. I find no nee....
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....d to delve into depth. Reply By Ganeshan Kalyani: The Reply: Selling price would be more than the purchase price. So the GST payable would be more than the input tax credit. So GST input tax will not be in balance. Some input may be parked in your books which could be ineligible credit like rent-a-car, works contract service etc. Also check your GSTR 2A which will show the credit available to yo....
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....u and compare with the books. Reply By Himansu Sekhar: The Reply: 1 lakh is not a big amount. As suggested by Ganesh kalyani ji and kasturi sir, value addition aspect to he taken into account. Reply By KASTURI SETHI: The Reply: Yes. ITC of Rupee one lakh does not fall in the category of 'a huge accumulation' as mentioned in the query by the querist. Such amount can be easily used soon....
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....er or later in the course of business or furtherance of business..<br> Discussion Forum - Knowledge Sharing ....